Any Charter Owners Out There ?

[FastLouie]

We are looking at a really sweet Island Packet 350 and have had an interesting opportunity presented to us. The broker we are purchasing from has run a power boat charter business in the past and is setting up a small charter operation to charter up to 4 Island Packets to aid in his sales efforts, as well as to help defray some ongoing costs of ownership. I'd like to appeal to those in this forum to share any relevant experieinces you have had with direct charter ownership experience. Items of particualr interest to me are:

1. Is there any correlation between the size and make model of baot and how often it is chartered? ie, do smaller boats get chartered more frequently, do high end boat get a higher charter fee, etc.
2. Any feedback on how often we can expect our boat to be chartered.
3. Any ideas on what purpose most charter clients charter for - ie, bareboat, day sail, boat & breakfast, special event - wedding, memorial-at-sea, sunset cruise, etc
4. Any specific info on companies that would be willing to share insight on pricing strategies and data on past charters

Thanks in advance to all who contributeto us as we work to fulfil our dream.

FastLouie

[maytrix]

I think a lot depends on where the boat is going to be chartered, what the competition is like and what boats people are interested in within that area. Without knowing the area, I don't think any of your questions can really be answered all that accurately. And as far as #1/#2, I'd take a look at the competition in the area, see how many boats they have and how busy they seem to be.

We have a boat in charter in the BVI's and have found it great. We pay no costs aside from our mortgage on the boat and have plenty of time to use it (more than we are able to). Company has been in business a long time, so we knew what we were getting. We had also chartered with them a few times so we knew the condition the boats were kept in.

The things I'd be hesitant about in your case are revenue - That's a big unknown with the start of a new business. I'd also question maintenance - who handles it, who pays and how good are those performing it? There's no history here, so its a big unknown.

What would you be responsible for? How long would it be in charter? And are you willing to accept the wear and tear that it will go through - not everyone treats a charter boat as if it was their own (I'd probably guess most don't)

[GordMay]

Greetings and welcome aboard the CF, FastLouie.

[nautical62]

I also have a boat in charter in the Virgin Islands. I just finished up 5 years in the Moorings and now have it in charter for year with Footloose.

I was paid a guaranteed income per month regardless of how often it was chartered out, so exactly how often it was chartered was not a big concern for me.

The charter company paid me about 45% of the price of the boat over the 5-year contract period, paid all dockage, all insurance, and all maintenance.

I have no complaints.

I'd personally be a bit wary of charter companies that provide no guaranteed income.

[maytrix]

One more thing I'll add that I think is very critical in your case.

If the charter company didn't work out, would you still be able to afford the boat? Assuming that's the case, the risk is certainly reduced, but you could find yourself paying for repairs caused by charterers.

[David_Old_Jersey]

Do some research on what other local charter operations are doing. and ideally lay hands on a couple of owners.

And remember that as a startup he needs your boat more than you need his business (for him it's cheap capital)........so you should be able to cut a better than average deal.

[s/v Beth]

I too would be cautious. I have had a charter boat for 3 years. I have yet to see a good profit. Now IP are good boats, but I would not start with someone that is venturing into the field. Too many businesses fail, and you will be left holding the bag.

[FastLouie]

Thanks to all for the responses. I share many of your concerns. A bit more here:

The only Charter companies I am aware of that Charter IP's are Island Yachts in the VI's and I think Gratitude in the San Juans. This will be the third one and will be in San Diego and be run by the local San Diego IP dealer. He's been an IP dealer since '98 and was the top IP dealer for 2010. He, like everyone else is on hard times due to the economy and is starting the charter operation to spur his sales efforts - probably more than to make income. He has experience running a charter operation as prior to '98 he was a Grand Banks dealer and had a very similar charter operation to support that business.

While we have no prospect of a guaranteed income, we will get the lions' share of the charter fee. Since his focus will be using our boat as a sales tool, the marketing becomes more important for us and focuses more on the recreational crowd. The dealer and his business partner are both licensed captains and plan to do mostly crewed sailings. Bareboat is an option, but the prospective charterer will need to demonstrate 'skills' as one would expect. We are also thinking outside the box about things like wedding/proposal sailings, sunset sailing, memorial/ash scattering, boat & breakfast, etc.

We've spent some time looking at other charter operations in San Diego and LA area and they seem to do brisk business, although, they are chartering Catalina's and Beneteau's - not that I'm knocking those boats - in our LONG search we had offers on each of those brands - but it's kind of my point. I'm left wondering how many charterers out there have chartered 'normal' charter boats such as those and would be intrigued by the ability to take out an IP next time instead at a comparable price point.

Maytrix raises an ineresting point - you cover all your costs except your note - is this because your boat doesn't go out enough, or because of the structure of your deal with the charter company? To your point, an IP is not an inexpensive boat, and while we could afford it's care and feeding if there was no payback, it would stretch things quite a bit - this is why I'm really trying to get some good feedback from charter owners prior to closing the deal - hopefully some in the So. Cal. area (sorry I neglected to mention that in the original post.) I'm really hoping to hear how much of the cost of ownership others have been able to cover.
One other thing I have going for me - My wife is a travel agent - hoping that pays dividends...wish us luck!

Anyone else out there? - any and all information is much appreciated

FastLouie

[maytrix]

I should clarify my earlier comment since my wording gave the wrong impression.

I said the only thing we pay is our mortgage on the boat. Everything else is handled by the charter company. But we do receive revenue for the boat which in turn covers our mortgage. So our out of pocket is nothing. We actually so far make a little extra. Unlike nautical62, our revenue is not guaranteed, but it so far has been enough. We don't expect to make a profit, but really want to have all if not the vast majority of our costs covered - the minimal profit we've made to date I'm just reserving for the days we may not make any profit.

It sounds like things could work out and seems like a reasonable plan, its just a huge unknown since its a new business. If I was in your shoes and could afford to do it (even stretching things) without any revenue, I'd strongly consider it. The only other thing I'd want to see is a plan on rates offerings and breakdown of the costs so you'd know what your take would ultimately be. Them saying 80% (for example) of profits means nothing if the profits are nothing.